1. By: Paula Ferreira Montoya, Esq.
Understanding
Estate Planning
By: Paula Ferreira Montoya, Esq.

2. WHAT IS ESTATE PLANNING?
Planning for transfer of assets at death
Creating plan for lifetime care and financial management
Reducing or eliminating costs of
Probate
Guardianship
Estate taxes

3. WHY DO ESTATE PLANS After Death At Incapacity
Control Who Receives Assets
Pay Minimum Legal Fees, Taxes
At Incapacity
Control Assets, Medical Decisions

4. INDIVIDUAL ESTATE TAX EXCLUSION 2016
U.S. Citizens and
Green Card Holders
$ 5,450,000
Non U.S. Citizens and
Non-Residents
$ 60,000
UNLIMITED MARITAL DEDUCTION
U.S. Citizens Only
Excludes Green Card Holders
and Non-Residents
Unlimited Amount to Spouses

5. COMMON ESTATE PLANS Will Do Nothing Joint Ownership Give Assets Away
Beneficiary Transfers
Revocable Living Trust
Advance Directives

6. 1. WILL Expresses Your Wishes Only Controls Assets Titled In Your Name
Enforced By Probate Court
Last Will & Testament

7. WHAT IS PROBATE Legal Process Only Legal Way to Change Title
Will Validated
Debts Paid
Assets Distributed According
To Will
Only Legal Way to Change
Title
Probate Court

8. PROBATE ILLUSTRATION
Assets Titled In Just Your Name Go Through Probate

9. PROBATE PROCESS CONTROLS
How Your Will Is Interpreted
Takes time – Several Months – Years
Costly
No Privacy
Easy To Contest

10. 2. DOING NOTHING At Death At Incapacity Minor Beneficiaries Probate
No choice of PR
Assets Distributed By
State Law
At Incapacity
Court Controls Assets
Minor Beneficiaries
Guardian Controls Assets

11. 3. JOINT OWNERSHIP Joint Tenancy With Right Of Survivorship
Husband & Wife
Other
Transfer limitations
Tenants In Common
Death = Probate
Interest to Heirs of Decedent
Transferable Interest

12. DISADVANTAGES OF JOINT OWNERSHIP
Only Postpones Probate to death of survivor
Unintentional Disinheriting
Incapacity = Court Interference
Difficult To Remove Co-Owner
Lawsuits Against a Co-Owner
Debts/Tax Problems
Improper Titling = Probate

13. 4. GIVING AWAY ASSETS You Lose Control Could Cause Capital Gains Taxes
No Basis step up
Gifts Within 3 Years Of Death May be Included in Estate by IRS

14. 5. BENEFICIARY TRANSFERS
Direct To Beneficiary
Court Interference
Guardianship
Incapacitated
Minor
Probate
Beneficiary Dies First Or At Same Time = Probate
“To My Estate” = Probate

15. 6. Revocable Living Trust (Versus Will)
Avoids Probate – not owned individually
You maintain control during life
- Buy / Sell Assets As Before
- Change / Cancel Anytime
- Trust Contains Your Instructions
Incapacity – No Guardianship

16. YOU CONTROL INHERITANCE
Distribute All At Once
Distribute Installments
Distribute Income Only
Hold for Minors Or Incapacitated Heirs
Preserve Beneficiaries’ Government Benefits
Protected from Beneficiaries’ Creditors
Reduces or eliminates estate taxes

17. QUALIFIED DOMESTIC TRUST (QDOT)
A provision included in the Revocable Trust
Allows for the Unlimited Marital Deduction between spouses, including green card holders and non-residents
Delays the estate tax until the death of the surviving spouse

18. 7. ADVANCE DIRECTIVES Lifetime directives appointing someone to
Handle financial and contractual matters
Make decisions related to your health
Make decisions related to life support
Obtain your medical information (HIPAA)

19. What Is A Living Will? LEGAL DOCUMENT GOES INTO EFFECT
express in advance wishes concerning
the use of artificial life support
GOES INTO EFFECT
two physicians certify that a patient is unable to make medical decisions and as specified by the living-will law
DIRECT LOVED ONES AND DOCTORS
to discontinue life-sustaining measures
WITHOUT A LIVING WILL
life support may be continued indefinitely

20. What Is A Designation of Health Care Surrogate?
Appoints and authorizes someone to make health care decisions
Authorizes someone to access medical records
Copies of Living Will given to health care surrogate

21. What Is a Durable Power of Attorney?
Appoints Agent - Attorney In Fact -with power to act for another
Manage finances and property
Sign financial or legal documents
Authority of agent spelled out; legally binding
Survives Incapacity

22. PLANNING FOR FOREIGN NATIONALS
Goal is to reduce and/or eliminate PROBATE and ESTATE TAX
Options:
1. Revocable Trust
2. Joint Ownership
3. LLC or Corporation owned by Foreign Entity
4. Life Insurance and Life Insurance Trust (ILIT)